Correlation Between Fevertree Drinks and Hecla Mining
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Hecla Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fevertree Drinks and Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Hecla Mining Co, you can compare the effects of market volatilities on Fevertree Drinks and Hecla Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fevertree Drinks with a short position of Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Hecla Mining.
Diversification Opportunities for Fevertree Drinks and Hecla Mining
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fevertree and Hecla is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Hecla Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Fevertree Drinks is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fevertree Drinks Plc are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Hecla Mining go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Hecla Mining
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Hecla Mining. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.57 times less risky than Hecla Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Hecla Mining Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 459.00 in Hecla Mining Co on September 14, 2024 and sell it today you would earn a total of 103.00 from holding Hecla Mining Co or generate 22.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.26% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Hecla Mining Co
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Hecla Mining |
Fevertree Drinks and Hecla Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Hecla Mining
The main advantage of trading using opposite Fevertree Drinks and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Hecla Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hecla Mining will offset losses from the drop in Hecla Mining's long position.| Fevertree Drinks vs. Roper Technologies | Fevertree Drinks vs. Sunny Optical Technology | Fevertree Drinks vs. Accsys Technologies PLC | Fevertree Drinks vs. Metals Exploration Plc |
| Hecla Mining vs. Cincinnati Financial Corp | Hecla Mining vs. Alior Bank SA | Hecla Mining vs. Synchrony Financial | Hecla Mining vs. Lloyds Banking Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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